Observers Suggest Postponement Of Increase In Business And Industrial Electricity Tariffs, This Is The Reason...

Illustration of workers installing and repairing high voltage electrical installations (Dok PLN)

JAKARTA - Gadjah Mada University economic and energy observer Fahmy Radhi proposed delaying the increase in electricity rates for business and industrial customers because it could trigger high inflation.

"Inflation will increase if the government simultaneously raises the business and industrial customer groups, the proportion of which reaches around 64 percent," said Fahmi, quoted from Antara, Friday, June 10.

Previously, the government and parliament had agreed to increase electricity tariffs for customers above 3,000 volt amperes (VA) through a tariff adjustment scheme.

However, until now the policy of increasing electricity rates for groups of customers who have economic capacity has not yet been realized.

Fahmy assessed that the government was still calculating the impact of the increase in electricity tariffs on rising inflation because it was feared that it would disrupt the momentum of Indonesia's economic recovery after the COVID-19 pandemic.

The government should also calculate the compensation fund paid to PLN because PLN sells electricity at a rate below the economic price because the tariff adjustment scheme is not enforced.

"If the government decides to increase the electricity tariff for customers above 3,000 VA, it will not actually contribute to a significant increase in inflation because the proportion is only around 5 percent," said Fahmy.

According to Fahmy, if the government considers controlling inflation, the government can actually increase the electricity tariff for customers above 3,000 VA, and delay the increase in electricity rates for business and industrial customers.

"When business and industrial conditions have recovered, that's when the government must increase electricity rates. This is because business and industrial customers are the largest recipients of compensation, so they can ease the burden on the state budget for electricity compensation allocation," concluded Fahmy.

Since January 2017, the government has not implemented a tariff adjustment scheme, so the government must provide compensation for the difference between the supposed income and the actual income.

In 2021, the amount of compensation for electricity tariffs is recorded to have reached Rp. 24.6 trillion.